3pl Logistics

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THIRD PARTY LOGISTICS (3PL)
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THIRD PARTY LOGISTICS (3PL)

• Third Party Logistics (3PL) involves using
  external organizations to execute logistics
  activities that have traditionally been performed
  within an organization itself.
• Organizations that provide one or many of the
  following logistics services
• Transportation Management
• Public/Contract Warehousing
• Distribution Management
• Freight Consolidation

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THIRD PARTY LOGISTICS Services Provided
Service Category Basic Service Specific VAS
Transportation Inbound, Outbound Track, Mode conversion
Warehousing Storage, Facility Management Cross-dock, In transit merge, inventory control
Information Technology Provide and Maintain advanced information systems Transportation Management systems, Warehousing Management Systems
Reverse Logistics Handle reverse flows Recycling, Customer returns, Repair/refurbish
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THIRD PARTY LOGISTICS PROVIDERS Types

• Transportation Based
• Warehousing / Distribution Based
• Financial Based
• Forwarder Based

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THIRD PARTY LOGISTICS Advantages
Cost Reduction Elimination of infrastructure resources
Improved efficiency, service and flexibility Risk Sharing
Focus on Core Competency Better Cash Flows
Freeing up resources Access to resources not available at ones own organization
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THIRD PARTY LOGISTICS Disadvantages
Loss of control over the logistics function
Impact on in-house workforce
More distance from clients loss of personal touch
Discontinuity of services of a 3PL Provider Differences of opinion / perception of the service level of 3PL Provider
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THIRD PARTY LOGISTICS Growth Drivers in India
Strong GDP growth Increased FDI Inflows
Consolidation of raw materials from vendors Better Infrastructure
Goods and Service Tax Logistics Parks
Entry of MNC 3PL players in India Required focus on Core Competency
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THIRD PARTY LOGISTICS The Future!

• India spends around 14.4 of its GDP on logistics
  and transportation as compared to less than 8
  spent by the other developing countries.
• Indian logistics market is expected to grow at a
  CAGR of 12.17 by 2020 driven by the growth in
  the manufacturing, retail, FMCG and e-commerce
  sectors.
• 3PL logistics market in India is expected to be
  worth US 301.89 billion by 2020.
• The industry as a whole has moved from being just
  service provider to the position where they
  provide end to end supply chain solutions to
  their customers.

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